Chapter 8 Homework
Problems 1, 2, 3 a-d, 6a
1a. True, the original Phillips curve is the negative relation between unemployment and
inflation that was first observed in the United Kingdom by A.W. Phillips in 1958 (161,180).
1b. False, the original Phillip
Chapter 3 Homework
Problems 1, 2, 3, try 8, do 9 & 10
1a. True, the largest component of GDP is consumption. The text states, In 2010, it
[consumption] accounted for 70.5% of GDP (44).
1b. True, government spending, including transfers, was equal to 20.4%
Chapter 24 Homework
Summarize Section 1:
Section 1 of Chapter 24 summarizes what we have learned thus far about monetary
policy. Earlier in this course we learned that when the money supply is increased, the interest
rate decreases. This is completed thro
Chapter 9 Homework
Problems 1, 2, 5, 6
1a. True, the loss in output that resulted from the financial crisis is many times larger than the
losses on mortgages held by U.S. financial institutions. In mid-2008, losses on mortgages were
estimated to be around
Chapter 10 Homework
Problems 1, 2, 3a-c, 5
1a. True. On a logarithmic scale, a variable that increases at 5% per years will move along an
upward-sloping line with a slope of 0.05. The text states, The defining characteristic of a
logarithmic scale is that
Chapter 23 Homework
Problems 1, 2, 6, 7
1a. True. Tax smoothing and deficit finance does help to spread the burden of war across
generations. The deficit from the war will be eventually paid for over time, however the
government could just impose very hig
Chapter 22 Homework
Problems 1 5
1a. False. While it is true that there is a lot of uncertainty about the effects of monetary policy,
this does not mean that policy makers should not conduct such a policy. This uncertainty
should lead policy makers to be
Chapter 7 Homework
Problems 1, 2, 4, 5
1a. True. The aggregate supply relation does imply that an increase in output leads to an increase
in the price level. This is the result of four steps listed on page 135 of our text. An increase in
output leads to a
Chapter 6 Homework
Problems 1, 2a, 2d, 2e (use Figure 6-2), 3, 4a, 4b, 5, 6.
1a. False, since 1950 the participation rate in the United States has steadily increased over time,
reflecting mostly the increasing participation rate of women (112).
1a. False, the output growth was positive for emerging and developing economies in 2009 at
1b. True, the textbook notes that for emerging economies, the Euro area, and the United States
that by the end of 2008, stock prices had lost half o
Problems 1, 2, 3, 4, 7, and 9
1a. True, U.S. GDP was 28 time higher in 2010 than it was in 1960.
1b. False, when the unemployment rate is high, the participation rate will be low.
1c. True, the rate of unemployment tends to fall during expansion
Chapter 5 Homework
1a. True, the main determinants of investment are the level of sales and the interest rate.
1b. True, a higher level of output can be achieved only by lowering the interest rate.
1c. False, Equilibrium in the goods market implies that a
Chapter 4 Homework
Problems 1, 2, 3, and 4
1a. Only part of this statement is true. Financial wealth is a stock variable, while income is a
1b. False, the term investment is used by economists to refer to the purchase of new capital